Latest news with #KrisCox
Axios
23-05-2025
- Business
- Axios
Child tax benefit increase leaves out millions of kids, analysis says
The poorest kids in the country miss out on the full benefits of the expanded child tax credit in the " big beautiful bill." Why it matters: The bill now making its way to the Senate provides more tax breaks to higher earners than those at the bottom. By the numbers: The Republican bill raises the maximum child tax credit to $2,500 per child from $2,000 for three years. 20 million children would not fully benefit from the increase, according to an analysis from the Center for Budget and Policy Priorities (CBPP), since their parents don't earn enough income to get the maximum amount. "A majority of those children get nothing from the proposed expansion," says Kris Cox, director of federal tax policy at the CBPP. 17 million children as of now do not receive the full benefit from this tax credit, per the CBPP. None of them will get anything from the expansion. How it works: Under current law, families need upward of $30,000 a year to receive the full tax credit amount, explains Joe Hughes, senior analyst at the Institute on Taxation and Economic Policy. Parents who are poor and don't owe income taxes can only claim up to $1,700 per child, known as the "refundability cap." It's a number which adjusts annually for inflation. The new bill didn't raise the refundability cap. Instead, it only increases the maximum that parents, earning less $400,000 a year, can claim. A married couple filing jointly would need to earn $48,550 to receive the full tax credit under the new bill, per CBPP estimates. Under current law, a married couple has to earn $36,800. Zoom out: The new bill widens the gap between what's available to kids in higher income families and those who need help most. For example: A married couple with two children earning $400,000 a year, the max income allowed to claim the credit, would get an additional $1,000 tax credit. A single parent with two children, earning $24,000 a year, would get nothing, Cox explains in a recent Bluesky post. The parents who miss out on the full benefit are those working in low-paying jobs like cashiers, home health aids and housekeepers. Presumably a few of these parents are tipped employees who could benefit from the no-tax-on-tips provision of the bill. However, just as with this the child tax credit, many earn too small an income to benefit. The other side: The standard defense here is that low-income Americans don't pay very much in taxes. Their tax burden is low, so they shouldn't get the full credit because they don't need the tax relief. White House spokesman Kush Desai says wealth inequality decreased after the 2017 tax bill, and the new bill would lock that success in place. He adds that it builds on that success "by eliminating taxes on tips and overtime in addition to rewarding American manufacturing with full equipment and factory expensing to turbocharge America's economic resurgence." Between the lines: This big bill faces big hurdles ahead in the Senate — and the bond market — and it's not clear what will eventually make it through. The intrigue: The legislation also blocks another 4.5 million children from benefiting from the child tax credit because now to claim it, both parents, if they are filing jointly, must have their own Social Security numbers. Under current law, parents who don't have Social Security numbers can claim the credit if their child has one. So, for instance, a parent who is a non-citizen immigrant and files taxes with an ITIN number can claim it. Before 2017, any parent filing taxes could claim the credit. But when Congress changed the law in the first Trump tax bill, 1 million citizen children lost out, Cox says. State of play: The child tax credit provisions are a stark 180 for the House.
CNBC
22-05-2025
- Business
- CNBC
House Republican budget bill boosts maximum child tax credit to $2,500 — here's who qualifies
House Republicans on Thursday advanced President Donald Trump's "big, beautiful" tax and spending bill, which includes a bigger child tax credit for some families. If enacted, the House bill would make permanent the maximum $2,000 credit passed via the Tax Cuts and Jobs Act, or TCJA, of 2017. Without action from Congress, that tax break will revert to $1,000 after 2025. The House bill would make the highest child tax credit $2,500 from 2025 through 2028. After that, the credit's top value would revert to $2,000 and be indexed for inflation. More from Personal Finance:What the House Republican budget bill means for your moneyTax bill includes $1,000 baby bonus in 'Trump Accounts' House GOP tax bill passes 'SALT' deduction cap of $40,000 However, the House-approved child tax credit hike wouldn't provide relief to the lowest-earning families, according to some policy experts. The provision could still change in the Senate. If enacted, the House Republican bill could provide a maximum child tax credit of $2,500 per eligible kid, starting in 2025. However, the plan does "nothing for the 17 million children that are left out of the current $2,000 credit," Kris Cox, director of federal tax policy with the Center on Budget and Policy Priorities' federal fiscal policy division, previously told CNBC. Typically, very-low-income families with kids don't owe federal taxes, which means they can't claim the full child tax credit. Plus, under the House proposal, both parents must have a Social Security number if filing jointly and claiming the tax break for an eligible child. "This bill is taking the child tax credit away from 4.5 million children who are U.S. citizens or lawfully present," Cox told CNBC. For 2025, the child tax credit is currently worth up to $2,000 per qualifying child under age 17 with a valid Social Security number. Up to $1,700 is "refundable" for 2025, which delivers a maximum of $1,700 once the credit exceeds taxes owed. After your first $2,500 of earnings, the child tax credit value is 15% of adjusted gross income, or AGI, until the tax break reaches that peak of $2,000 per child. The tax break starts to phase out once AGI exceeds $400,000 for married couples filing together or $200,000 for all other taxpayers. "Almost everyone gets it," but middle-income families currently see the biggest benefit, said Elaine Maag, senior fellow in the Urban-Brookings Tax Policy Center. A bipartisan House bill passed in February 2024 aimed to expand access to the child tax credit and retroactively boosted the refundable portion for 2023, which would have impacted families during the 2024 filing season. The bill failed in the Senate in August, but Republicans expressed interest in revisiting the issue. At the time of the vote, Sen. Mike Crapo, R-Idaho, described it as a "blatant attempt to score political points." Crapo, who is now chairman of the Senate Finance Committee, said in August that Senate Republicans have concerns about the policy, but are willing to negotiate a "child tax credit solution that a majority of Republicans can support." Although House Republicans previously supported the expansion for lower-earners, the current plan "shifts directions and focuses the benefits on middle and high-income families," Maag said.
Axios
15-05-2025
- Business
- Axios
Surprising winners and losers in the tax bill
The battle over the " big beautiful tax bill" is just getting started, but there are early signs of who stands to benefit and who loses out, with some a bit more surprising than others. Why it matters: What lawmakers decide in coming weeks will directly affect people's lives. For many, notably high earners and the wealthy, it will mean more money in the bank. Others will have to scramble to stay fed or get health care. State of play: The White House and Republican lawmakers are framing the proposed tax cuts, which just passed out of the Ways and Means Committee yesterday, as a win for the average American. The bill would extend the tax cuts in Trump's 2017 law, which are set to expire, and tack on additional tax breaks, especially at the higher end. The White House pointed out in a release that earners making between $30,000 and $80,000 would pay around 15 percent less in taxes in 2027 versus the current law, citing a report by the nonpartisan Joint Committee on Taxation and a recent report from Politico. Yes, but: Most policy groups look at a different measure, which is how tax breaks affect income after taxes. (Here's a great explainer on that from the Tax Policy Center). It's clearer through this lens that top earners score a bigger break. By the numbers: The overall trend is the highest earners receive a bigger boost to income after taxes. The top 1% of earners could see a 4.3% increase in income in 2027 versus current law, as all the tax breaks hit, per an analysis from the left-leaning Center on Budget and Policy Priorities. The bottom 20% would get a 0.6% boost. Another new estimate from the right-leaning Tax Foundation finds a similar pattern, with a 4.4% boost in after-tax income for the top 5% of earners in 2026, a slightly smaller increase for those in the middle, and a 2.4% increase for those in the bottom 20%. The tax cuts might not be all that noticeable, particularly at the lower end, since the estimates are compared with a baseline scenario in which taxes would rise with the expiration of the 2017 law. Between the lines: Those numbers only look at a piece of what's under consideration in the House. Two other tax bills are in various stages. One, voted out of committee yesterday, would slash Medicaid funding. The other would radically overhaul SNAP, historically known as food stamps. All three tax bills will ultimately get rolled together into the big legislation that could be voted on before Memorial Day. What they're saying:"When you put the tax cuts together with the spending cuts that are proposed it doesn't just do a little for low- and moderate-income families, it's proposing to take benefits away from people," says Kris Cox, the director of federal tax policy at the Center on Budget and Policy Priorities. This is an income group that also faces disproportionately higher costs from new tariffs. For the record: "The One, Big, Beautiful Bill is going to deliver historic tax relief for everyday Americans and implement commonsense reforms that will protect and preserve SNAP and Medicaid for the Americans who these programs were intended to serve," White House spokesman Kush Desai says. "The President has repeatedly said that he will ensure that these programs will remain a reliable and sustainable lifeline for generations to come, and we are keeping that promise for the American people." The Trump administration said the only people who will lose Medicaid coverage are people who shouldn't be covered in first place: adults who could be working and those who are undocumented immigrants. It also argued the SNAP changes aren't cuts but a way to share costs with states. Follow the money: While the very poor lose out, there are things to like for working-class and middle-class Americans. Those who earn tipped income or work overtime receive new tax breaks. A higher standard deduction will also be a boon for taxpayers. The elderly also score a bonus. Instead of a direct elimination of income taxes on Social Security, Republicans came out with a slight variation: a temporary increase in the standard deduction for those over 64. Perhaps surprisingly, some of these provisions scramble red and blue lines. If the Medicaid changes pass, it would be a huge blow to hospitals in rural areas, something that could be particularly devastating to maternal health care. Some hospitals would be forced to close. The increase to the state and local tax deduction, better known as SALT, would be a boon to more blue states. Reality check: Things are in first draft mode. Various pieces of the tax bill are in different stages of advancing in the House. The Senate journey has not yet begun.
